Zoom’s Selloff Might Spark a Rally

Zoom Video Communications, Inc. has its stock down almost 85% from its pandemic peak that wiped out approximately $135 billion of market value, and analysts are livid. On Friday, Zoom closed at $89.74.

Benchmark Co.'s Matthew Harrigan said, "The fixation on Zoom as a Covid pandemic lockdown aberration is exaggerated as global tech and financial firms recognize the permanence of hybrid work," he said.

Aside from Harrigan, many analysts believe that Zoom can still thrive even after the pandemic as a growing number of employers and employees prefer flexible work arrangements.

Synovus' Trust senior portfolio manager Daniel Morgan said, "I think the Street is not filtering through all the tea leaves with Zoom. They're just kind of stamping it with the stay-at-home Covid trade like Amazon or Netflix and are not really looking at the bigger fundamentals."

The platform became a household name in March 2020 as people all over the world were forced to work from their home. Although there were many video conferencing platforms out there today, Zoom became the preferred application.

Set To Prosper Despite the Competition

As schools and offices slowly reopen and with the growing competition, such as Microsoft's Teams and Salesforce's Slack, volatility is expected. However, there remains to be an air of optimism surrounding the San Jose California-based company to thrive even in a post-COVID world.

Many analysts believe that due to the astounding reliability that Zoom delivered, which it's proven during the strict lockdowns of the global pandemic, it will remain a reliable platform that will be needed for virtual communication in the future.

Furthermore, Zoom has already captured a good user experience over the years.

Just recently, Zoom revamps apps with new features to cater to those transitioning from work-from-home setups. For one, its screen-sharing model has become more interactive with the Collaborate Mode.

Collaborate Mode features an online whiteboard called Miro that allows participants to launch a collaborative workspace for everyone to interact in real-time.

It also now allows teammates to create together through the Code App for Zoom.

Zoom is also pushing Breakout Rooms that enable participants to break into smaller groups to allow for more focused discussions.

Better-Than-Expected First-Quarter Earnings

Zoom shares rose 16 percent in extended trading on Monday and have surpassed analysts' earnings estimate for the quarter. The company also provided profitability guidance for the current quarter and full-year that go beyond expectations.

This only shows that the company is able to reduce its costs as growth decelerates.

This article is owned by Tech Times

Written by April Fowell